It said settling a claim early sends a message to "have-a-go" employees that if they file a claim they will receive an outof-court settlement from employers afraid of massive legal costs and threat to their reputation.

Of the 115,042 applications registered with the employment tribunal service in 2003/04, the Advisory Conciliation and Arbitration Service settled nearly half.

Croner's head of litigation, Robert Kerr, said: "While there are certain high profile cases that have resulted in high payments, this is not the norm.

"If employers believe they have acted reasonably, they may be best advised not to settle."

The highest award made at an employment tribunal last year was £635,150, but the average award for unfair dismissal, which constitutes almost half of all claims, was just £7,275. For discrimination, the average awards were all under £30,000.